ngmoco/Freeverse Deal Forms a Front in Free-to-Play Biz Model

When prolific App Store publishers ngmoco and Freeverse came together on February 22 in an acquisition of the latter by the former, both companies said that the fledgling free-to-play business model played a major role in the deal. So-called “freemium” games, which ngmoco started releasing last year and which Freeverse plans to begin publishing soon, are free to download but require gamers to make in-app purchases of items needed to keep playing.

“Look at the download numbers for Paid vs. Free apps on the App Store,” Freeverse vice-president Colin Smith explained. “There are ten times the number of people on the Free side. We think US$0.99 is a pretty ridiculously cheap price for the games we make, but if we can get ten times the audience, and make more money at the same time, then that’s pretty awesome.”

He added: “We’ve got a whole generation of kids raised on Free-To-Play Flash games, and they’re not shopping for Paid games at all. This isn’t a change that’s going to happen overnight, it will take years, but we want to be leading the way and defining what a really great Free-To-Play experience means.”

“’Free’ may well be the most powerful word in the English language,” Simon Jeffrey, ngmoco’s Chief Publishing Officer, told me. “This has to be qualified by quality, however. Crap is still crap, even if it’s free. We firmly believe that the market is moving in the direction of Pay-For-Use rather than the older model of retail buying. Freemium allows users to try games to see if they enjoy them, and only invest money in games they know that they enjoy. We believe that this will open up consumers’ minds around experimentation, and will net result in more gamers in the ecosystem.”

As part of that, Mr. Jeffrey said “ngmoco will work strategically with Freeverse on overall market direction and moving toward a Freemium strategy.” However, he added that Freeverse “will remain very much an independent entity with regard the games that it builds.”

Mr. Smith echoed that sentiment: “The ngmoco team has a wealth of experience developing some really big games and having that as a resource can only help. That said, they acquired us because of who we are and what we do, I don’t think they want to change that at all. The style and humor that is uniquely Freeverse will stay intact.”

Courtship

The acquisition came about because, as Mr. Jeffrey explained, “ngmoco and Freeverse discovered quite some time ago that we have a lot in common. When Freeverse partnered with the plus+ network the relationship blossomed, and the commonalities and shared gaming and business goals really showed us that the dating could lead to a happy marriage.”

Mr. Smith added: “When they called us up and asked if we’d be interested in exploring the possibility of an acquisition, it wasn’t like a cold-call from some faceless corporation 3,000 miles away. We already knew these guys, and both liked and respected them.

“Freeverse has been around a long time, we’ve never taken a dime in outside investment, and we’ve been doing pretty well these last few years. Our decision to sell was not about us looking for the exits, but looking toward the horizon.”

That horizon is awash in iPhone games, and Mr. Smith admitted that “the Mac side has taken a backseat to the iPhone for the last two years, and that’s still the case. We love the Mac and we’ll still be selling, supporting and even releasing new titles for the Mac, but since Steve Jobs unveiled the iPhone, there’s never been any doubt about where the opportunity was for us as a company. So in that respect, I don’t think this acquisition will impact our strategy for the Mac at all.”

Mr. Jeffrey said that ngmoco won’t have any involvement in Freeverse’s Mac game development. Unlike Freeverse, which opened its doors in 1994 as a Mac game publisher, ngmoco began its existence with a focus on the App Store and plans to keep it there. Whether or not Free-to-Play will be the wave of the future there remains to be seen.